GBP/USD: Weekly Forecast 29th October - 4th November

Speculators who have been anticipating a wonderful turn higher in the GBP/USD which is sustained and continues to find momentum for a duration were certainly disappointed again last week. Day traders continue to find the GBP/USD a currency pair which is correlating to the broad Forex market as the USD maintains a sincere amount of strength.

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The GBP/USD went into the weekend near the 1.21175 level, the day before the currency pair touched the 1.20690 ratio. The GBP/USD has been able to stay above the 1.20000 level rather consistently, which is likely viewed as an important psychological mark by financial institutions. On the 4th of October the GBP/USD traded near the 1.20375 ratio briefly. The fight near lows is also producing reversals higher which traders are trying to take advantage of during moves upwards.

The high for the GBP/USD this past week was accomplished on Tuesday when the Forex pair touched the 1.22890 vicinity, only to begin moving lower again. The value that the GBP/USD closed at on Friday certainly was within the lower realms of the pair’s low for last week and October. Behavioral sentiment remains fragile due to global considerations and economic concerns for financial institutions; this is causing a rather solid amount of uncertainty and a lack of risk appetite.

U.S Federal Reserve and Bank of England this Week

GBP/USD traders need to be aware that the U.S. Federal Reserve and Bank of England will make their monetary policy decisions regarding interest rates this Wednesday and Thursday. Both central banks are expected to keep their key borrowing rates in place. Rhetoric from the Fed on Wednesday will be important and could cause a stir. The U.S. is producing consistent data that shows American consumers remain spenders. The UK economy has produced lackluster data, but it has also shown signs of having slightly better results than anticipated.  

However, the Fed while not likely to raise the Federal Funds Rate this week, will probably continue to sound rather hawkish and let financial institutions know interest rates will remain elevated and the prospect of another hike remains real. The BoE will likely take on a more dovish-sounding tone, which may make GBP/USD traders nervous. Current price levels of the GBP/USD remain low and many presume oversold, but predicting when a sustained surge higher will be triggered is difficult as financial houses remain nervous globally.

The 1.20000 Level Remains in Sight, but will a Test Unfold and Cause a Reaction

  • As the GBP/USD trades near one month lows, meaning also it is touching values seen in March of this year, speculators may want to speculate on upside action, but this is very dangerous.
  • Nervous trading will likely continue this week, which is almost certain to produce rather choppy conditions.
  • Technical traders may be looking for another drop lower from the GBP/USD to see if support can hold again near the 1.20000 ratios, and then anticipate a pop upwards.
  • However, behavioral sentiment could cause more dangerous price velocity if global markets suddenly turn more risk-averse.

GBP/USD Weekly Outlook:

Speculative price range for GBP/USD is 1.20125 to 1.22990

The trend lower in the GBP/USD continues to be demonstrated and traders looking for more downside action cannot be blamed, but for the currency pair to trade much lower another dose of negative events will likely have to hit the global markets making the USD a safe haven magnate. If this doesn’t happen and the markets can remain tranquil and cautious, results may produce rather choppy results in the GBP/USD which exhibits typical reversals, this as financial institutions try to navigate until clear skies emerge.

While it may be tempting to believe the GBP/USD is oversold and will turn higher, knowing when this moment will start to become a sustained trend remains speculative. Buyers of the GBP/USD should remain realistic with their targets, particularly if they are short-term traders who need to protect a limited amount of trading funds.  The combination the Fed and BoE with other global events unfolding, and delicate markets could make for another temperamental week of trading.

GBP/USD

Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.